In just one year, Vancouver house prices have dropped by 12%, and unit sales are plummeting in both Vancouver and Toronto.
In August, the number of
sales in Greater Vancouver fell 21.4% from the previous month, after
dropping 11.2% in July and 17.2% in June. The Real Estate Board of
Greater Vancouver chalked it up to a “summer lull,” but the numbers
suggest a trend that can’t be dismissed as simply seasonal. Last month,
unit sales were the lowest for any August in the past dozen years, and
nearly 40% below the 10-year August norm. Even more worrying, the
average home price in Vancouver is now down more than 12% from a year
ago—a worrying sign for the country’s priciest city.
The poor global economy
is souring foreign investors’ appetite for expensive property overseas.
The federal government, meanwhile, is trying to tame the market by
tightening mortgage lending standards and warning the public at every
opportunity that Vancouver is a risky city for buying real estate.
Interest rates are still low, but the Bank of Canada keeps promising to
raise them, which would quickly lower affordability. All of which leads
David Madani, an economist with Capital Economics, to conclude: “The
Vancouver market has cracked.”
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